Douglas v. Renola Equity Fund Ii, LLC

Defendant Louisiana Citizens Property Insurance Corporation ("Louisiana Citizens") moves for partial summary judgment on plaintiffs' bad faith insurance practices claims under La. R.S. §§ 22:1892 and 22:1973 in relation to policy number FO XXXXXXXXXXX.[1] The Court grants the motion because plaintiffs have failed to provide the Court with any evidence demonstrating that they have a valid, underlying insurance claim against Louisiana Citizens.

I. Background

Plaintiffs are former owners and tenants of apartments and condominiums located at 217 and 301 Plantation Drive in Chalmette, Louisiana. Following Hurricane Isaac's landfall in August of 2012, plaintiffs allege that they suffered various injuries and damages as a result of toxic mold exposure. Plaintiffs further allege that, because of the toxic mold and other unrepaired damage caused by Hurricane Isaac, St. Bernard Parish officials declared the properties uninhabitable and ordered plaintiffs to vacate their homes. Plaintiffs brought suit against several defendants asserting different theories of liability against each defendant. At issue here are plaintiffs' claims against Louisiana Citizens for bad faith insurance practices under La. R.S. §§ 22:1892 and 22:1973.[2]

Louisiana Citizens provided commercial wind and hail insurance coverage for the apartment buildings at 217 and 301 Plantation Drive under policy number FO XXXXXXXXXXX. Renola Equity, II, LLC is the only entity listed as a named insured on the policy.[3] Additionally, Darren Tyus, an employee of Louisiana Citizens, provided an affidavit stating that "[n]one of the plaintiffs to this matter made any claims with [Louisiana Citizens] under Policy Number XXXXXXXXXXX[] prior to the filing of the above captioned litigation."[4] Plaintiffs have not provided the Court with any evidence in support of their opposition, but nevertheless argue that summary judgment is inappropriate because: (1) there are numerous questions of fact as to various peripheral issues;[5] (2) discovery is in its infancy; and (3) Louisiana Citizens is an indispensable party to the litigation.[6]

II. Legal Standard

Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers "all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but "unsupported allegations or affidavits setting forth ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment." Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at 1075.

If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party "must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.'" Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with evidence sufficient to demonstrate the existence of a genuine dispute of material fact, or "showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id.; Little, 37 F.3d at 1075 ("Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" (quoting Celotex, 477 U.S. at 322)).

III. Discussion

La. R.S. §§ 22:1892 and 22:1973 provide penalties to insureds and policy beneficiaries if an insurer acts in bad faith when adjusting a claim made under an insurance policy.[7] In order to recover statutory penalties under La. R.S. §§ 22:1892 and 22:1973, a plaintiff "must first have a valid, underlying, substantive claim upon which insurance coverage is based." Matthews v. Allstate, 731 F.Supp.2d 552, 566 (E.D. La. 2010). In other words, the "penalties in these statutes do not stand alone; they do not provide a cause of action against an insurer absent a valid, underlying insurance claim." Clausen v. Fidelity and Deposit Co. of Md., 660 So.2d 83, 85-86 (La.App. 1st Cir. 1995). See also Bayle v. Allstate, 615 F.3d 350, 363 (5th Cir. 2010) ("Breach of contract is a condition precedent to recovery for the breach of the duty of good faith.").

Plaintiffs have failed to establish a genuine issue of material fact as to whether they have a valid, underlying insurance claim against Louisiana Citizens under the policy at issue. As an initial matter, the insurance contract names Renola Equities, the owner of the apartment buildings at issue, as the sole named insured under policy number FO XXXXXXXXXXX.[8] See Herbert v. Hill, 855 So.2d 768, 771-72 (La.App.2d Cir. 2003) (tenants cannot bring bad faith adjustment practices claim under landlord's insurance policy). The policy does not provide third party liability or property coverage. Moreover, even if plaintiffs could bring a claim under Renola Equities' insurance policy, Louisiana Citizens provided an affidavit of its claims handler stating that Louisiana Citizens never received a claim from any of the plaintiffs in this case under the insurance policy at issue.[9] Plaintiffs do not offer any evidence to rebut this assertion. Louisiana Citizens cannot be liable to plaintiffs for bad faith adjustment practices when plaintiffs never filed claims for Louisiana Citizens to adjust. Thus, absent evidence of an underlying insurance claim, plaintiffs' bad faith insurance practices claims under policy number FO XXXXXXXXXXX fail as a matter of law. See Chet Morrison Contractors, LLC v. Onebeacon Am. Ins. Co., Civ. A. No. 14-1958, 2015 WL 1221616, at *6 (E.D. La. Mar. 17, 2015) ("Because [plaintiff] has no underlying claim against [defendants], its claims under La. Rev. Stat. §§ 22:1892 and 22:1973 fail as a matter of law.").

Plaintiffs make three arguments in an attempt to defeat summary judgment, none of which has merit. First, plaintiffs contend that "there are numerous genuine issues of material fact" that preclude summary judgment.[10] The supposed questions of fact, however, have no bearing on the issue before the Court-whether plaintiffs have a valid, underlying insurance claim against Louisiana Citizens. As stated above, a valid, underlying insurance claim is a "condition precedent" to claims under La. R.S. §§ 22:1892 and 22:1973, Bayle, 615 F.3d at 363, and plaintiffs cannot defeat summary judgment by attempting to manufacture questions of fact as to various peripheral issues. Moreover, none of plaintiffs' asserted factual disputes is supported by any evidence in the record.[11] Accordingly, even if plaintiffs' arguments were germane to the issue at bar, unsupported contentions and references to allegations in the complaint are insufficient to defeat summary judgment. See Celotex Corp., 477 U.S. at 324 (To defeat summary judgment, nonmoving party must "go beyond the pleadings and... designate specific facts showing that there is a genuine issue for trial."); Weyant v. Acceptance Ins. Co., 917 F.2d 209, 212 (5th Cir. 1990) ("[T]he party opposing the motion may not sit on its hands, complacently relying upon the pleadings.").

Plaintiffs next argue that summary judgment is inappropriate because "discovery in this matter is in its infancy."[12] The proper vehicle for raising this argument is a motion under Federal Rule of Civil Procedure 56(d), which requires an affidavit or declaration specifying "why additional discovery is necessary and how additional discovery will create a genuine issue of material fact." Canady v. Bossier Parish Sch. Bd., 240 F.3d 437, 445 (5th Cir. 2001) (internal quotations omitted). Plaintiffs have not provided the Court with an affidavit or declaration, and have otherwise failed to explain how additional time would allow plaintiffs to create a genuine issue of material fact as to whether plaintiffs have a valid, underlying insurance claim against Louisiana Citizens. Because a Rule 56(d) request to defer ruling on a motion for summary judgment "may not be ...

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